Intra-Industry Trade, Involuntary Unemployment and Macroeconomic Stability
نویسندگان
چکیده
We study the impact of intra-industry trade and capital mobility on steady state welfare stability properties two countries with identical technologies preferences. consider a two-factor overlapping generations model, featuring one-sector differentiated goods taste for variety. There is imperfect competition in output market increasing returns to scale production (fixed costs externalities). In one country there full employment saddle path autarky, whereas other are efficiency wages, autarkic equilibrium may be locally indeterminate. After opening borders, rigid wage export indeterminacy country, particularly if it big enough. contrast, when sufficiently big, local indeterminacy, therefore expectations driven fluctuations eliminated world. any case, stochastic deterministic (associated bifurcations) possible smaller externalities, whatever relative size countries. Steady improves free mobility, while unemployment increases labor rigidities, reducing welfare. also find that variety (and trade), reduces likelihood but leads flip bifurcations under more plausible values model parameters.
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ژورنال
عنوان ژورنال: Social Science Research Network
سال: 2021
ISSN: ['1556-5068']
DOI: https://doi.org/10.2139/ssrn.3771730